5 Ways To Expand Financial Inclusion For The World’s Poor

Technologies like mobile payments, blockchain, biometric data, crowdfunding, and microfinance have the potential to extend financial inclusion to the world’s poor.


 

How surreal. After studying his work for years, Muhammad Yunus—champion of financial inclusion, founder of microfinance, and winner of the 2006 Nobel Peace Prize—is standing in front of me and a few dozen others in a bookstore. His is an incredible journey in social entrepreneurship, and I feel humbled to be seated in the same room.

In celebration of the occasion of getting to meet this huge hero of mine, I’ve outlined five ways that companies, institutions, and nonprofits can harness technological innovations to advance financial inclusion and empower the world’s most vulnerable people:

    1. Crowdfunding to unlock empathy and investment capital

    Raising money for personal causes, and medical fundraising, in particular, is having a moment in places like India with crowdfunding websites like GlobalGiving’s partner, Impact Guru. As people become digitally connected, they gain access fundraise from empathetic individuals around the world. Crowdfunding also represents a major opportunity for businesses in emerging markets, because the added transparency encourages investors to engage. In fact, crowdfunding capital has surpassed that of traditional venture capital firms.

    2. Mobile payments to alleviate extreme poverty

    Western countries are finally catching up in the realm of mobile payments. Last month, PayPal announced that its scaling its popular person-to-person payments technology, Venmo, to millions of online retailers. Since 2007, offerings like M-Pesa, a mobile money transfer service, which began as an initiative from the telecommunications company Vodafone, is a huge opportunity for those living in primarily cash-based societies like Kenya and Tanzania. Just last month, Google launched Tez, an “audio QR” payment solution for mobile phone users in India. And the government of Bangladesh announced plans for a nationwide mobile payments system by early 2018.This industry is growing rapidly because mobile payment services enable transform people’s ability to save their money securely and access it conveniently. It’s making life better and business easier for people everywhere.

    3. Blockchain to combat corruption

    For many, blockchain is synonymous with Bitcoin—but its potential for international development goes far beyond cryptocurrency. It’s no secret that corruption is a major struggle for some of the world’s less economically developed countries. Innovators are looking to apply blockchain to provide, among other things, transparency and accountability in financial transactions. With potential use cases for everything from electronic medical records to land deeds, this technology is likely to disrupt the status quo—in everything from how people do business to creating new business opportunities at the bottom of the pyramid. Disberse is a social enterprise that launched last year with a blockchain-based distribution solution. The company seeks to accelerate aid funding distribution and provide transparency in how funds are spent using blockchain. BitPesa, Banqu, and UCash are scaling similar concepts in Kenya, Indonesia, and India.

    4. Biometric data to enable government benefit transfers

    1,171,000,000. That’s how many residents of India have enrolled in the world’s largest biometric identification system. India’s Aadhaar identification program has succeeded in issuing an ID to 99 percent of the country’s adult residents. This program unlocks access for individuals who may previously lacked an identity paper such as a birth certificate. Thanks to Aadhaar, they can now receive direct government benefits such as pensions and subsidized kerosene. An Aadhaar ID can meet the identification requirements for purchasing a SIM card and opening a bank account. In fact, it is now a requirement for Indian bank accounts to be linked to the account owner’s Aadhaar ID. Much of the Aadhaar identification system’s potential has yet to be realized. But it has helped the Indian government thus far transfer $12 billion in benefits directly to individuals’ bank accounts electronically, making it the world’s largest cash transfer system. Other countries may seek to copy it since it can help cut down on fraud and open access to government programs for needy individuals.

    5. Microfinance, in all its forms, to increase access

    Microfinance still matters decades after its invention. It is how millions of individuals currently gain access to loans, insurance, and savings accounts. Microfinance institutions like Muhammad Yunus’ Grameen Bank are asking the question, “Why can these people not be served by banks?” Increasingly, traditional banks are responding to the business opportunity of serving the billions at the bottom of the pyramid.

Cutting edge companies are already implementing these technologies to improve lives. Capital One partnered with Grameen America, the U.S. offshoot of Grameen Bank, to expand access to microfinance in the U.S. JPMorgan Chase funds new financial inclusion technologies that enable streamlined food assistance enrollment, reputation-based borrowing, and more. Companies like IBM and Nasdaq are investing in blockchain technology and may be positioned to help scale the technology for social good.

Incredible possibility lies in the field of financial technology, and whether through mobile payments, blockchain, biometric data, crowdfunding, or microfinance, there exist untapped opportunities to help the world’s poor.

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Featured Photo: Business School for rural women in India by Mann Deshi Foundation.

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